MARKETS TAKE SPENDING CUTS IN STRIDE

Strong data help stocks end session, week on a high note

Stocks rose Friday, with the major indexes finishing with weekly gains, as upbeat consumer confidence and manufacturing data countered concern about government-spending cuts.

Federal Reserve Chairman Ben Bernanke’s reiteration this week that monetary stimulus would continue helped support equities, with the Dow Jones industrial average on Thursday coming within 15 points of its all-time closing high hit on Oct. 9, 2007.

“It’s the great bull market that no one believes in,” Alan Skrainka, chief investment officer at Cornerstone Wealth Management, said of equities nearing all-time highs.

On Friday, the Dow ended 75 points from its record finish, recovering from a 116-point drop after a report showed U.S. factories expanded in February at the fastest pace in almost two years. The Institute for Supply Management said its manufacturing index accelerated last month, rising to 54.2 percent from 53.1 percent in January. Any reading above 50 signals growth.

Up 0.3 percent for the week, the Dow industrials added 35.17 points, or 0.3 percent, to 14,089.66.

The S&P 500 index advanced 3.52 points, or 0.2 percent, to 1,518.20, with health care faring best and industrials leading declines among its 10 major sectors. The index posted a 0.2 percent weekly gain.

The Nasdaq Composite climbed 9.55 points, or 0.3 percent, to 3,169.74, leaving it 0.3 percent higher for the week.

For every three stocks that declined, roughly four gained on the New York Stock Exchange, where 743 million shares traded. Composite volume neared 3.7 billion.

“The sequester panic, if this was 18 months ago, we could have seen multi-hundred point swings in the market,” said Kevin Divney, chief investment officer at Beaconcrest Capital Management in Boston. “What has happened is that the policy makers have lost credibility with the stock market.”

Democrats and Republicans are in a standoff over how to replace the federal spending cuts, known as sequestration, in the 10-year, $1.5 trillion deficit reduction plan. Of that total, $85 billion in cuts, set to kick in Friday, would occur in the remaining seven months of this fiscal year.

“There seems to be some belief that some sort of deal will come up that would postpone the sequestration,” said Jordan Irving at Irving Magee Investment Management in Philadelphia. “We didn’t think the deal would get done, so it’s just another headwind to the overall economy. I think people are going to take the weekend to really look at this.”

Americans’ incomes fell 3.6 percent in January, the worst one-month drop in 20 years, the Commerce Department said Friday. Still, U.S. consumers increased spending modestly in January but cut back on major purchases, showing households were weathering the payroll-tax increase Jan. 1 by socking away less money in the bank.

Outside the U.S., data showed China’s manufacturing slowed for a second month while factory output in the euro area contracted for the 19th straight month.

Unemployment across the 17 European Union countries that use the euro currency hit a record 11.9 percent during January. That drove money into U.S. Treasurys, pushing their prices up and their yields down.

The yield on the 10-year Treasury note fell to 1.85 percent from 1.88 percent late Thursday.

Among other stocks making big moves Friday:

• Gap shares gained 2.9 percent, or 95 cents, to $33.87, a day after the clothing retailer tallied fourth-quarter profit that exceeded estimates, helped by better sales at its Old Navy stores. Gap also raised its quarterly dividend to 15 cents.

• Groupon rallied nearly 13 percent a day after the daily-deals provider fired its CEO Andrew Mason after a disappointing quarter. Its stock gained 57 cents to $5.11.

• Intuitive Surgical jumped 8.5 percent to $553.40 for the largest advance in the S&P 500. The manufacturer of surgical systems rebounded following Thursday’s 11 percent loss amid a safety probe by U.S. regulators of the company’s robots.